Negotiating by position vs. negotiating by merit
Posted: Sat Feb 22, 2025 8:13 am
Do you know what positional negotiation vs. merit negotiation is?
I want to start today's content with some questions to help us identify the two types of negotiation in practice:
Have you ever negotiated a deal in which the potential client wouldn’t give up anything?
Or were you the buyer of the process and the seller closed the deal and didn't offer you any discount?
This situation can be common in some sales. But today we will address this issue so that you understand what happens in negotiation by position and also know how to get around these situations with negotiation by merit.
Negotiating by position vs. negotiating by merit
In a negotiation, the main objective is to close a contract by maximizing financial profit for the company and making the product the best one to cure the customer's pain.
Now, let's understand two types of negotiation: negotiation by position and negotiation by merit.
Position Trading:
Positional negotiation occurs when one side of the process or both parties do not make concessions.
To reach an agreement that is advantageous for both Malaysia telegram data the seller and the customer, both sides must be flexible and shape the final proposal according to each person's needs, but also compromise when necessary.
Imagine that you are going to purchase training for your company's employees and the following dialogue occurs:
Customer: “Could you give me a 20% discount?”
Salesperson: “That’s my final price.”
Client: “Okay, but I can’t close a deal for that price. But my budget allows me to get your service with a 15% discount. What do you think?”
Salesperson: “I won’t do my job for that price. Let’s not negotiate.”
A salesperson who behaves this way will probably lose many contracts.
You need to be smart in a negotiation and know when a potential client's request will harm your company.
But, it is also necessary to be open to listening to the prospect and have strategies to bargain in the best way.
In the example given at the beginning of this topic, it is possible to see that the salesperson stuck to his proposal, while the potential customer also did not give up receiving a discount, despite being more flexible.
Therefore, it is possible to conclude that this was a negotiation for positions, in which each party maintained their position and there were no concessions.
It is essential to understand that negotiating does not mean giving up everything, but rather creating an environment in the negotiation that allows concessions to be made, also understanding how much the person on the other side is willing to give in.
There are two types of position trading:
Relational negotiation:
In relational negotiation the main objective is to maintain a good relationship.
In this process, people prefer not to try to make a concession out of insecurity or fear that the other party will think something bad.
This type of negotiation also occurs when the potential client and the seller have a good relationship, so one of the parties ends up making many requests during the negotiation, trusting that, due to the friendship, they will be met. Therefore, the preparation phase is very important: defining Walkaway and Batna and understanding the ZOPA.
Positional Trading:
In positional negotiation, people stick to a position during the negotiation, not opening themselves up to concessions from the other party.
This process ends up looking like a game, in which the winner is the one who reaches the conclusion without giving in to proposals from the other side.
Typically, in positional negotiation, there is not much conversation. The parties get stuck in one opinion and are unlikely to reach an agreement.
The solution to positional negotiation is merit-based negotiation. Let's see how?
Negotiation on merit:
Negotiation on merit is a method created by Harvard experts with the aim of breaking or minimizing the chances of a position negotiation occurring throughout a sales process.
I want to start today's content with some questions to help us identify the two types of negotiation in practice:
Have you ever negotiated a deal in which the potential client wouldn’t give up anything?
Or were you the buyer of the process and the seller closed the deal and didn't offer you any discount?
This situation can be common in some sales. But today we will address this issue so that you understand what happens in negotiation by position and also know how to get around these situations with negotiation by merit.
Negotiating by position vs. negotiating by merit
In a negotiation, the main objective is to close a contract by maximizing financial profit for the company and making the product the best one to cure the customer's pain.
Now, let's understand two types of negotiation: negotiation by position and negotiation by merit.
Position Trading:
Positional negotiation occurs when one side of the process or both parties do not make concessions.
To reach an agreement that is advantageous for both Malaysia telegram data the seller and the customer, both sides must be flexible and shape the final proposal according to each person's needs, but also compromise when necessary.
Imagine that you are going to purchase training for your company's employees and the following dialogue occurs:
Customer: “Could you give me a 20% discount?”
Salesperson: “That’s my final price.”
Client: “Okay, but I can’t close a deal for that price. But my budget allows me to get your service with a 15% discount. What do you think?”
Salesperson: “I won’t do my job for that price. Let’s not negotiate.”
A salesperson who behaves this way will probably lose many contracts.
You need to be smart in a negotiation and know when a potential client's request will harm your company.
But, it is also necessary to be open to listening to the prospect and have strategies to bargain in the best way.
In the example given at the beginning of this topic, it is possible to see that the salesperson stuck to his proposal, while the potential customer also did not give up receiving a discount, despite being more flexible.
Therefore, it is possible to conclude that this was a negotiation for positions, in which each party maintained their position and there were no concessions.
It is essential to understand that negotiating does not mean giving up everything, but rather creating an environment in the negotiation that allows concessions to be made, also understanding how much the person on the other side is willing to give in.
There are two types of position trading:
Relational negotiation:
In relational negotiation the main objective is to maintain a good relationship.
In this process, people prefer not to try to make a concession out of insecurity or fear that the other party will think something bad.
This type of negotiation also occurs when the potential client and the seller have a good relationship, so one of the parties ends up making many requests during the negotiation, trusting that, due to the friendship, they will be met. Therefore, the preparation phase is very important: defining Walkaway and Batna and understanding the ZOPA.
Positional Trading:
In positional negotiation, people stick to a position during the negotiation, not opening themselves up to concessions from the other party.
This process ends up looking like a game, in which the winner is the one who reaches the conclusion without giving in to proposals from the other side.
Typically, in positional negotiation, there is not much conversation. The parties get stuck in one opinion and are unlikely to reach an agreement.
The solution to positional negotiation is merit-based negotiation. Let's see how?
Negotiation on merit:
Negotiation on merit is a method created by Harvard experts with the aim of breaking or minimizing the chances of a position negotiation occurring throughout a sales process.